Cody and Christian Osgood answer five questions about multifamily real-estate investing. An 18-year-old should finish school rather than drop out, though Cody's own early college exit was a rare opportunity. Buy more units in good locations and improve management instead of fewer high-quality ones.
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Hey YouTube, Cody and Christian here for this week's video of Whiteboard Wednesday. We've got 5 more questions for you that are across a very large spectrum. And our first one is, how would you recommend choosing a location, state or city, to invest when you're looking at apartment buildings?
Ooh, that is an excellent question, an excellent question. Well, the first thing we look at is population growth. When you're providing housing, the wonderful thing is everyone needs a place to live. If there's less people, not every single roof is needed. You need people to rent to. If people want to leave that area, that means prices are likely to go down and it's going to take longer to lease out something because there's just not as much demand.
Should you buy a 12-plex where there's only 100 people? Probably not.
Unless you think that you can always lease out to 12% of the population, I wouldn't try it. The next thing we're looking at is I want to see strong jobs in the area. That's something— just know the employers. If you see a lot of really fringe work or temporary work, if everyone is working at a crypto mining facility and that's the only job, jobs might disappear.
Crypto salmon will die. Yeah.
So look for stable jobs, know what the employers are, know what the median income is. And those are really the top two things we look at. There's other factors, but if people want to live there and and there's decent income, it's probably a really good place to get started. Next question from Alex. Hey Cody, should I leave high school and get my GED? I want to build— or sorry, buy large multifamily.
Thanks, Alex. No, that would not be the right decision. Finish what you started. If you're 18 years old right now, and you're willing to quit on your commitment that you made 4 years ago, that would be unwise. I would stick to your commitment, see it through. Yeah, it seems like it's a whole lot of fun to go out into the, the adult world right now, but finish what you started. If you're willing to back out on your own commitment, you're just going to create a habit, and when it becomes habitual, it's going to be very, very difficult to get out of that. So No, just no. That's it.
Now, legitimate question that people might have on this channel. Cody, you did drop out of college, which was a 4-year commitment. That is a rebuttal that Alex could have.
Yeah.
When you graduated high school and decided college wasn't for you, how does that differ from your advice to Alex?
You're 18 years old and you started doing this 4 years ago. If I was 3.9 years into my college degree, I would finish. But I was 2 quarters into my college degree and I had an opportunity to get directly into real estate. You are so close to finishing what you started, that would be a waste of time. That's a really strong word there, but that would not be an effective use of your time. Finish what you started. You are so close. Finish out your commitments. There are always going to be other opportunities, but you're not going to get a second chance to start over. So finish what you started, and we're going to move on to the next question.
I 100% agree with Cody, by the way.
Don't do that.
Don't do it.
That would be dumb. Zoran, hey guys, got a question. Would you rather have fewer but better units with better quality renters Or have more units with a lesser quality of tenants? Ooh.
So if you have great quality tenants and great units, it's usually going to be in a better location, which I like. However, and this is a good question, more units, that is a problem that we can fix with good property management. If there are a lot of units with some mediocre tenants, that's a problem where we probably have upside where we can come in and if we can solve that problem, there's likely more upside and more income as a reward for solving that. My inclination is I want more units.
And they're not mediocre tenants just because they're bad people. It's because there's been bad management for extended periods of time and they don't know what expectations are. If you could fix the management, you're set. That's it. You just have to set expectations like we're trying to set for Alex. Finish your commitment. Well, with tenants, you have to set expectations as well. No, we're not taking cash in a sweaty bag. You need to direct deposit. You set expectations and your quality of tenant goes up because they know what they're going to get and they know the people they're going to be around.
In this question, we are excluding location from the equation. If it is in a terrible area and you have terrible tenants because the area is just absolute garbage and you could buy a nicer building in a nice neighborhood, I would do that. You can fix a property, you can fix property management. You cannot fix a neighborhood or a city by yourself.
You need a team. You need to be disciplined enough to stick to valid principles. Don't violate your principles. Our principles: we don't compromise on location ever. And so because of that, if we can fix management, we can usually get the tenants to better appreciate the space. And we've got another question for Christian. When should you hire a CPA or tax strategy person?
Ooh, man. Excellent sets of questions as always. Tax strategy and CPA. Well, CPA is going to be one of the earlier members of your team. However, you don't need one until you have complicated enough problems to have that. You need to have some real estate. If you have a duplex by yourself and you have a W-2 job, you can probably go to H&R Block and they can sort you out just right. Self-filing your taxes on TurboTax. I've done that several times on my first rentals. It's not that hard.
You did it. Yeah.
And I did that up to my first 2 properties. I had a house and a couple rentals, and that is where I did my own taxes. Once we started doing partnerships, multi-unit buildings, you have LLCs, lots of units. Once you start to get to the point where you personally feel like you're getting overwhelmed, pay the professional. Pay the professional. It is always worth it. You do not want to mess that up. If you have partners, I'm just going to say blanket statement, if you have partners in an LLC, it's one thing to mess up your own finances. It's a whole nother thing to mess up someone else's. You should have a CPA at least looking over your work if you're involving anyone else in your numbers.
And we got one more question.
That we do from Kyle. I know you just made a video on how to contact sellers, but Are there any other methods you use?
All right, I'm going to quote myself from earlier talking to younger Alex. No. Watch that video. That video is what we do. We find people on Google Maps. We figure out who owns them, give them a call, and through that process, we book meetings to learn how they did it. That is it. I try and keep things so simple that you will never believe it's how I actually did it. That is how I did it. It's how I've done everything. It's how Christian's doing everything. We have bought stuff from the MLS, but we build relationships with everybody. That's it. Give them a call, learn how they did it, ask for that helping hand. How would you recommend that I actually go do something similar? In that process, you're sharing your goals, you're sharing your why, you're sharing relatable points that have brought you to where you can actually go meet with them. And then you ask for help. That's it. That is that simple. So that's this week's 5 questions. If you have more questions, put them in the comments below. And if you want to see a future video, let us know. We'll make it happen. And as always, like, comment, subscribe, and we'll see you guys next time.
